Is Comcast Trolling For Content?

Comcast chief operating officer Steve Burke gave some fleeting hope to deal brokers at an industry conference Wednesday, stating that the cable giant would take a hard look at content deals, while also saying Comcast has no plans to make make any transformational deals.

Comcast COO Steve Burke
Steve Burke of Comcast
Burke, speaking at the Bank of America Merrill Lynch Media, Communications & Entertainment conference in Marina del Rey, Calif., said that while some companies have decided to separate their cable distribution business from their cable content holdings (a la Time Warner Inc. earlier this year), Comcast believes that the two can work harmoniously together.

He pointed to News Corp. and Liberty Media as successful content companies that also have distribution arms -- News Corp. with British Sky Broadcasting and Liberty with DirecTV.

"You really can create a lot of value by putting content and distribution together, particularly of the content is cable content," Burke said. "When you look at the big media companies, the best businesses that all of us have in the entertainment business are cable content channels, which have a dual revenue stream. I think we would not be doing our job if we weren't trying to figure out how to get bigger in those businesses. If the opportunity came about where we could add cable content to our portfolio, I think we would do it."

Burke estimated that about 95% of Comcast's business is cable distribution with 5% coming from video and internet content. Among Comcast's programming assets are cable channels E! Entertainment Television, Versus, The Golf Channel, several regional sports networks and G4. The company also is a investor in The Style Network, TV One and PBS Kids Sprout.

While Burke did not identify ant potential targets, Comcast has been reportedly among the early bidders for the Travel Channel and is perennially among the candidates when any programming or cable asset comes up for auction. The company has also been named as a possible suitor for NBC Universal which, according to Broadcasting & Cable, is reportedly making moves to change its ownership structure.

But Burke stopped short of claiming that Comcast was gearing up for a buying spree, adding that Comcast is not looking to do a major deal.

Burke essentially put the damper on any speculation that it would be hunting for more cable systems in light of the repeal of the 30% cable ownership cap.

Burke said that adding scale doesn't mean as much to the company, which currently has 24 million subscribers, as it did 10 years ago when it had 8 million customers.

"We would like to get bigger if the economics were right," Burke said. "Its pretty hard for me to see how there would be synergies on the programming side or on the hardware side when you go from 24 million subscribers to 27 [million] or 30 [million]. Ten years ago, we looked at it and said in the world we see coming, we need some scale."

Steve Burke and Brian Roberts of Comcast
Steve Burke and Brian Roberts of Comcast
Burke said he sees considerable growth in the business as it stands today, noting that commercial services could represent $2.5 billion in revenue alone by 2012.

He also sees substantial growth remaining in so-called maturing products like high-speed Internet service, which he believes will accelerate once its DOCSIS 3.0 products begin to be more widely available.

Burke said that Comcast currently has 15 million high-speed Internet subscribers out of a footprint of 50 million homes. That service has the potential to add between $2 billion and $3 billion in revenue over the next three to five years, he added.

Burke also said ongoing initiatives like TV Everywhere -- currently in trials with about 5,000 customers -- and interactive advertising also should add to the value of the company.

He said the TV Everywhere concept should go national in the next 30 to 60 days and has about two dozen programmers already participating.